It’s not just retirement plan sponsors at corporations whose employees keep them up at night. Plan sponsors at not-for-profits are also concerned about whether their employees are sufficiently prepared to retire when the time comes.
According to TIAA’s inaugural Not-for-Profit Plan Sponsor Insights Survey, sponsors’ top fear is that employees will delay retirement because they do not have enough money. Sixty-four percent are worried about that, while 59 percent are concerned that employees will run out of money in retirement.
Those two fears far outpace concerns about meeting responsibilities as a plan fiduciary; only 38 percent say they’re concerned about that.
In addition to revealing plan sponsors’ fears, the survey also indicates ways in which sponsors can improve employee outcomes. More than half of NFP plan sponsors say they offer a plan with a guaranteed lifetime income option, with the great majority (87 percent) planning to keep it. But for those who do not provide a lifetime income option in their plan, 34 percent of whom say participants can access annuities outside of the plan and 21 percent who believe fees are too high, it might be wise to reconsider. (See the infographic below for more figures; click to enlarge.)
TIAA says that the survey results indicate that sponsors are accepting some “myths” about annuities, and not realizing that lifetime income options offered through a workplace retirement plan can offer benefits that employees may not find through retail financial solutions.
In addition, the firm says that in most cases, those options have lower fees than those found in retail markets.
Plan sponsors should also reconsider the ways they expect employees to draw down their retirement savings, according to TIAA.
While 35 percent expect employees to take systematic withdrawals to come by retirement income, if employees do that they run the risk of outliving their savings.
And while 81 percent of sponsors offer one-on-one financial advice services, 71 percent say employee engagement is a significant challenge.
Their responses on effective ways to increase engagement, however, indicate a disconnect between what they think is effective and what they’re actually doing.
While 68 percent believe financial education designed specifically for different age groups or life stages is effective, just 33 percent offer it, and although 50 percent believe financial education designed specifically for women is effective, just 14 percent offer it.